Farmers and Middlemen in a Transmigration Area in Indonesia 1

Compared with long-settled lava, transmigration areas in the outer islands of Indonesia are characterised by an underdeveloped transportation and communication infrastructure that makes farmers' access to markets relatively difficult. In this case study, however, no significant difference was found in either marketing margins or middleman profits between a transmigration area in Sumatra and a long-settled area m West Java. High risk and transaction costs, associated with long-distance trade under poor infrastructure, together with delays in the issue of formal land titles to transmigrant settlers, operate as entry barriers to marketing activities. These negative factors in the transmigation area are largely compensated for by the larger marketable agricultural surplus per farm, which has the effect of reducing transportation and transaction costs.     

The choice of organizational form under intrafirm bargaining rules

This paper studies the choice of organizational form under incomplete contracts. We identify an organizational form with a rule of ex-post bargaining and compare four types of organization: horizontal organizations, inverted pyramidal hierarchies, pyramidal hierarchies and vertical hierarchies. We show that if the human capital investments of all members are perfectly complementary, the horizontal organization is chosen. If the investments of two players including the owner are essential, the inverted pyramidal hierarchy can occur. Pyramidal hierarchies minimize the agency cost if investments are non-firm-specific. The vertical hierarchy emerges when the owner can motivate a player who undertakes firm-specific investment by assigning him to the middle tier. We also examine who should be assigned to the middle tier in a vertical hierarchy.     

Barriers to Global Free Trade through Bilateral Agreements

This paper examines the formation of bilateral free trade agreements (FTAs) in the context of a dynamic noncooperative bargaining game with a random proposer. We show that global free trade (a grand coalition) does not necessarily occur unless transfer payments among countries are allowed. When transfer payments are possible, bilateral FTAs always achieve global free trade, but the ex‐ante and ex‐post inequalities of social welfare among countries are larger than those when all countries are independent because of the strategic bargaining behavior.     

Income and Employment Generation from Agricultural Processing and Marketing: The Case of Soybean in Indonesia

This study aims to illustrate the potential of agricultural processing and marketing activities in generating local income and employment in developing economies, using soybean in Indonesia as a case. The results show that those activities add to rural income and employment at a scale equal or even larger than those generated from farm production itself, indicating their role in alleviating poverty and inequality in the rural sector.     

Book Reviews

Jonathan R. Pincus (1996), Class, Power and Agrarian Change: Land and Labour in Rural West Java, Studies on the Economics of East and Southeast Asia, Macmillan, Hampshire, pp. xii + 248.

Pierre van der Eng (1996), Agricultural Growth in Indonesia' Productivity Change and Policy Impact since 1880, Macmillan and St Martin's Press, London and New York, pp. xii + 375. £50.00

Mari E. Pangestu and Yuri Sato (eds) (1997), Waves of Change in Indonesia's Manufacturing Industry, Institute of Developing Economies, Tokyo, pp xiv + 225.

Peter van Diermen (1997), Small Business in Indonesia, Ashgate, Aldershot, pp. xvn + 234. Cloth: £37.50

Jonathan Rigg (1997), Southeast Asia: The Human Landscape of Modernization and Development, Routledge, London, pp. xxv + 326.

HaI Hill, Indonesia's Industrial Transformation, Institute of Southeast Asian Studies, Singapore, and Allen & Unwin, Sydney, pp xix + 403.     

Existence and efficiency of a stationary subgame-perfect equilibrium in coalitional bargaining models with nonsuperadditive payoffs

We provide the existence theorem of stationary subgame-perfect equilibrium (SSPE) in a noncooperative coalitional bargaining game model with random proposers. Our model contains a bargaining situation where the coalitional game is nonsuperadditive. We also provide a necessary and sufficient condition for the existence of a pure-strategy SSPE satisfying the efficiency property when the discount factor is close to one. Furthermore, we provide examples where the delay in agreement occurs, even in a random-proposers model, when the game is nonsuperadditive. I am grateful to Akira Okada and an anonymous referee for their useful comments and helpful suggestions.     

Business start-ups in Japan: problems and policies

This paper argues that the comparatively low levels of businessstart-ups in Japan need not be a matter of concern in so faras the pattern of growth relying on existing companies persists.But the declining trend of start-up rates may be worrisome forit may indicate waning entrepreneurship and weakening mechanismsof resource reallocation and economic growth. Policy measuresto promote business start-ups are not based on well-foundedstudies at an aggregate level, which are lacking in the absenceof comparable data, but rather are inspired by the successfulUS experience. The paper looks into two specific areas of policy- private equity markets and bankruptcy - where important progresshas been made, and points to further scope for improvement.     

Voice matters in a dictator game

We conducted a laboratory experiment to study the effects of communication in a dictator game, while maintaining subjects’ anonymity. In the experiment, the recipient has an opportunity to state a payoff-irrelevant request for his/her share before the dictator dictates his/her offer. We found that the independence hypothesis that voice does not matter is rejected. In particular, if the request is for less than half of the pie, the dictator’s offer increases as the recipient’s request increases. Additionally, there is no dictator who is other-regarding and, at the same time, does not react to the recipient’s request.

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